Correlation Between Intel and TMT Acquisition

Can any of the company-specific risk be diversified away by investing in both Intel and TMT Acquisition at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Intel and TMT Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intel and TMT Acquisition Corp, you can compare the effects of market volatilities on Intel and TMT Acquisition and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Intel with a short position of TMT Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and TMT Acquisition.

Diversification Opportunities for Intel and TMT Acquisition

-0.36

Correlation Coefficient

Intel  TMT Acquisition

Very good diversification

The 3 months correlation between Intel and TMT is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Intel and TMT Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Acquisition Corp and Intel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Intel are associated (or correlated) with TMT Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Acquisition Corp has no effect on the direction of Intel i.e., Intel and TMT Acquisition go up and down completely randomly.

Pair Corralation between Intel and TMT Acquisition

Given the investment horizon of 90 days Intel is expected to under-perform the TMT Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 4.13 times less risky than TMT Acquisition. The stock trades about -0.01 of its potential returns per unit of risk. The TMT Acquisition Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  34.00  in TMT Acquisition Corp on October 24, 2024 and sell it today you would earn a total of  4.00  from holding TMT Acquisition Corp or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.04%
Values	Daily Returns

Intel  vs.  TMT Acquisition Corp

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

TMT Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMT Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak fundamental indicators, TMT Acquisition may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Intel and TMT Acquisition

The main advantage of trading using opposite Intel and TMT Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, TMT Acquisition can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TMT Acquisition will offset losses from the drop in TMT Acquisition's long position.

The idea behind Intel and TMT Acquisition Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.